Richard Thaler, author of “Nudge,” won the 2017 Nobel Prize in economics. He’s been uncovering and popularizing cognitive biases in his study of behavioral economics for more than 30 years. Thaler studies the human behaviors that don’t fit rational economic expectations, or the dumb stuff people do.

Do you know your firm’s No. 1 one dumb, unprofitable activity?

You, too, can use the study of dumb stuff to your advantage. First, have your C-suite executives independently, and perhaps anonymously, write down their top three dumb, profit-draining activities within the company. What’s the consensus? Which activity is the No. 1 dumb activity?

You can also be inspired by Andy Grove, former CEO of Intel. In his book, he shares details of Intel’s turnaround. In 1984, Intel’s profits were $198 million. In 1985, the company fell off the cliff to less than $2 million as the Japanese were dumping memory chips and the PC chip was just taking off. The author asked Intel founder, Gordan Moore, a pivotal question, “If we got kicked out and the board brought in a new CEO, what would he do?”

Gordan answered without hesitation, “He’d get out of memory chips.”

Andy replied, “Then, why don’t we walk out the door, come back in, and do it ourselves”

That’s what they did.


Increase your courage for stopping the dumb stuff and reduce your fear of flailing.

The first step is forgiveness. Publicly forgive everyone for enabling the No. 1 dumb activity to persist. Next, take the lead from Thaler and identify the ego issues and cognitive biases, like wishful thinking and that others-do-it-too mentality, that have rationalized the behaviors that enable the No. 1 dumb activity.

Once you’ve identified the dumb activity and analyzed the human factors, use analytics to be very precise about the problem so that you can take the juiciest slice of it and design a small experiment to fix it. The experiment should be designed to minimize costs and ego hits while maximizing learning.

Next, perform the experiment. Reflect on the results and learn from them. Then, try a second bigger, smarter, more confident iteration. Each iteration will help you grow your mastery and confidence for ridding your company of dumb, profit-losing activities.

Lastly, to create real change you’ll have to persistently nudge those who can pursue the cure for dumb on a wider scale.


A distribution chain performed a customer profitability analysis to target the five most profitable and five most unprofitable accounts at every branch. A monthly nudge memo was sent that listed the 10 accounts and asked managers, “What are you doing to take any of these accounts to a better level?”

After seven nudges, two branches turned a huge shared-losing account it into a profit winner with a $1.2 million-plus profit swing. You can listen to the full story in this seven-minute video clip:

The takeaway? Decide what your No. 1 dumb activity is. Measure it, rank it, experiment small, learn, nudge to scale, and increase profits.

Publication date: 04/20/18